Financial Comparison

Financial Comparison

Financial Comparison

Sainsbury

Sainsbury is a big retailing company and is known for its financial services, as well. It has a supermarket, home based stores (online stores), convenience stores and also a Sainsbury bank. The two main segments in which the company operates are the food retailing companies and the financial services.

Sainsbury is a huge company and serves approximately 16 million customers every week. It has 752 supermarkets which includes 297 convenience stores in the United Kingdom. The Sainsbury bank is a joint venture between the Bank of Scotland the Sainsbury.

Home Retail Group Plc

Home Retail Group (HRG) is a retailer of general merchandise and home related products. HRG is headquartered in Milton Keynes, the UK and employs 52,308 people of which 27,888 are employed on full-time basis.

Home Retail Group is a United Kingdom home and general merchandise retailer. Co.'s two retail brands are Argos and Home base with customer bases across the United Kingdom and Ireland. Argos is a United Kingdom general merchandise retailer and Home base is a United Kingdom home improvement retailer which offers a range of home enhancement products and services in a differentiated store environment. Co. operates over 1,000 stores in the United Kingdom and Ireland across the Argos and Homebase formats. Co.'s products include toys, jewellery, sports and leisure equipment, home enhancement, electrical goods, gardening/seasonals, home enhancement and DIY/decorating.

Profitability comparison of SAINSBURY and Home Retail Group

Operating income margin

The third factor in our analysis is the profitability factor of the company. The first profitability ratio in our analysis is the operating income margin (Bandler 1994, 58).

Table 1: Operating income margin comparisons

(Source: www.finance.yahoo.com)

(Expressed in whole numbers)

In table 1, we have described the operating income margin of both the companies in our analysis. From the above table, we cans see that there is not much difference between the profitability of Home Retail Group and SAINSBURY in terms of percentage. The operating income margin of SAINSBURY has been at a constant percentage of six percent in the past three years and in case of Home Retail Group, it has been around five percent. We can see the same thing in chart 1, in which we have shown the operating income margin trend of Home Retail Group and SAINSBURY.

Chart 1: Operating income margin trend

Return on equity

Table 2: Return on equity comparison

(Source: www.Home Retail Group.co.uk and www.Sainsburyplc.com/)

The second ratio in our analysis is a comparison of return on equity, which is a measure of the profits of the company in comparison to its equity. This ratio measures that how much a company is earning on its equity, i.e. how much returns is the company providing to its shareholders. In table 2, we have summarized the return on equity of our companies, calculated from the data extracted from their financial statements. From the above figures, we can see SAINSBURY has been providing more returns to its shareholders as compared to Morisson.

Chart 2: Return on equity trend

From chart 2, we can see the trend of return on equity of ...